In the event that a director withdraws from his/her office after guaranteeing a definite debt for which the debt is specified during his/her term of office, whether the guarantee contract may be terminated or the liability may be limited on grounds of change in circumstances (negative)

The guarantor has been in the position of director of a company and has been able to limit the liability of the guarantor only for the debt incurred when he/she is in the position of director because he/she has been able to guarantee the company's obligation under the bank loan regulations. The case where the guarantor can limit the liability of the guarantor only for the debt incurred when he/she is in the position of director, such as comprehensive collateral guarantee or limited collateral guarantee, is limited to the case where the amount of debt is guaranteed for the debt incurred from an uncertain and continuous transaction, and even if he/she has already retired from the position of director at the time of guarantee after giving guarantee

Articles 428 and 543 of the Civil Act

Supreme Court Decision 94Da46008 delivered on December 27, 1994 (Gong1995Sang, 671) Supreme Court Decision 95Da27431 delivered on February 9, 1996 (Gong1996Sang, 909) Supreme Court Decision 95Da31645 delivered on February 14, 1997 (Gong197Sang, 740)

Korea Assets Management Corporation

Defendant (Attorney Lee Jae-sung, Counsel for defendant-appellant)

Seoul High Court Decision 98Na12890 delivered on September 4, 1998

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Where the guarantor is in a position as a director of a company and the guarantor is able to limit the liability of the guarantor only for the debt incurred when he/she is in a position as a director due to the joint and several surety for the company's obligation, such as comprehensive collateral guarantee or limited collateral guarantee, if the amount of debt is guaranteed for the obligation arising from an uncertain and continuous transaction. Even if the guarantor has already retired from the position of director after guaranteeing the debt of the company, even if he/she had already been in a position of director at the time of guarantee, the guarantee contract may be terminated for reasons of change of circumstances or his/her responsibility is not limited (see, e.g., Supreme Court Decisions 94Da4608, Dec. 27, 1994; 95Da31645, Feb. 14, 1997).

According to the reasoning of the judgment below, the court below found that the defendant, upon the request of the non-party corporation Boyang Ship Co., Ltd. (hereinafter the non-party company), was a professional manager around October 1987 and the representative director of the non-party company took office, and the non-party company prior to taking office using the form of exchange loan extended the term of payment for the loan borrowed from the non-party Korea Exchange Bank (hereinafter the non-party bank) with the purchase fund of the ship, the non-party company's representative director and other officers can jointly and severally guarantee the loan obligations of this case in accordance with the loan regulations of the non-party bank. The defendant also knew that the term of payment for the existing loan can not be extended by borrowing the form of exchange and the number of funds actually cannot be used as a joint and several surety at the time of entering into the joint and several guarantee contract of this case, or that the defendant did not unilaterally recognize the defendant's obligations of the non-party company as a joint and several surety's guaranteed obligation of the non-party company's new and several surety contract of this case.

The Supreme Court's decision on the argument in the grounds of appeal against the rules of evidence is not appropriate to invoke that the case is different from the case or is not directly related to the case.

Therefore, the appeal is dismissed and the costs of appeal are assessed against the losing defendant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)